The first heavy rain came three weeks after closing. Water crept along the base of the basement wall, and when the new owners pulled back a strip of freshly painted drywall, they found dark staining and an old crack that someone had sealed over. Their immediate question was the obvious one: the sellers must have known, so can we make them pay?
Perhaps. But the answer depends on what can be proved about what the sellers knew and did, what was said in the deal, and what a reasonable inspection would have shown. Ontario law does not start on the buyer’s side. Its starting point is the old phrase caveat emptor, let the buyer beware. For resale homes in particular, many unpleasant discoveries after closing are simply the buyer’s cost.
The law does, however, have meaningful exceptions. This post explains them and sets out what to do when you discover a problem, because the first steps can affect whether a claim is ever possible. It is general information and not legal advice about your home or your purchase agreement.
Patent and Latent: A Distinction That Drives the Analysis
Lawyers divide defects into two categories.
A patent defect is one that could be discovered by reasonable inspection and ordinary care. Cracked tiles, a visibly sagging porch or an obviously worn roof are the usual examples. Buyers generally have to accept these, whether or not they noticed them. The fact that you chose not to look closely, or waived an inspection to win a bidding war, does not turn a visible problem into the seller’s responsibility.
A latent defect is not readily apparent to someone taking reasonable care. It may lie behind finished walls, under flooring or in the ground. Even so, a latent defect does not automatically create liability. In McGrath v. MacLean (1979), 22 O.R. (2d) 784, the Ontario Court of Appeal affirmed that a buyer takes the property subject to latent defects unless an exception applies.
A problem that looks hidden may also be treated as patent if there were signs of it. A fresh patch of paint at the bottom of a basement wall, an efflorescence stain or a musty smell might have alerted a careful buyer. The line between these two is often the central fight in a lawsuit.
When a Seller Can Be Liable
There are several general routes to liability.
Fraud or active concealment. A seller who knows about a defect and deliberately hides it cannot rely on buyer beware. Installing drywall to cover known water damage or moving furniture to hide a crack, then saying nothing, may fit here. You must prove knowledge and an intention to deceive, or recklessness, which can take strong evidence. Dates of renovations, invoices from a previous waterproofing company and neighbours’ accounts can be important.
Known defects that make a home dangerous or unfit. Courts have recognized a duty to disclose a known latent defect that makes a property dangerous or unfit for habitation. If a seller knew about, for example, a serious structural problem or a hazard that threatens health, silence may not be an option.
Misrepresentation. If the seller, or their agent, said something false, the law may step in. It does not matter whether the statement was written on a listing, a form or a text message. The statement can be fraudulent or negligent, and the buyer must generally show that they reasonably relied on it. “The basement has never leaked” is a representation. So is a seller’s written answer on a disclosure form.
Breach of the agreement. Your agreement of purchase and sale may include warranties or terms the seller breached. Standard forms often include a term that the agreement is the entire deal and that there are no other representations, except those in writing. A warranty typed into Schedule A carries real force. Equally, a clause saying no warranties exist will be raised against you.
Seller Property Information Statements
Ontario does not require sellers to fill out a Seller Property Information Statement, or SPIS. Many are advised not to. If one is completed and attached to the deal, however, it can become a key document. A seller who answers a question falsely, or answers in a way that hides what they know, may be exposed. A careful “unknown” may be perfectly appropriate, whereas a confident “no” about something the seller actually knows may not be.
Krawchuk v. Scherbak, 2011 ONCA 352, is the Ontario Court of Appeal’s discussion of these forms. It involved a home with serious settling and foundation issues. The court reviewed the sellers’ statements in the form and found the listing agent liable for failing to take adequate steps to protect the buyers from misleading statements. This was a fact-driven decision, but it shows that a seller’s agent may potentially also have exposure in the right case. Your own agent or home inspector might also be relevant, depending on what they promised and did.
If there was no SPIS, you have lost one useful piece of evidence, but you have not necessarily lost your claim. Fraud does not need a form.
Some Common Brampton Scenarios
Particular facts often arise in resale homes here. Examples might include:
- Basement water. Past leaks or sewer backups covered by renovations are a frequent source of complaints. City permit records and an insurance claim history, if one can be accessed, may help establish knowledge.
- Basement apartments. A listing that calls a unit “legal” or “income-producing” when it does not meet code or has never been properly registered raises questions of misrepresentation. Brampton has its own rules for additional residential units. Before you close, ask what was approved, not what was built.
- Unpermitted work. Additions, decks or structural changes without permits could trigger a City order or be costly to correct. A check of the City’s records can reveal open permits.
- Structural settling. Uneven floors or doors that stick might hint at a bigger problem. An engineer can often speak to how long it has been developing.
- Past use. Issues such as prior drug production or mould may fall under the concerns about fitness for habitation, depending on what is known and the extent of remediation.
These are illustrative only. Each one turns on the actual evidence.
New Builds Have a Separate Route: Tarion
If you bought a home from a builder, a different set of rights applies alongside any contractual ones. Ontario’s New Home Warranties Plan Act provides statutory warranties administered by Tarion Warranty Corporation. Coverage generally runs one year for defects in work and materials, two years for items such as water penetration through the basement and electrical, plumbing and heating systems, and seven years for major structural defects. The process has its own forms and deadlines, including conciliation steps and timing windows.
Check whether your home is still within those periods, even if you bought it from a prior owner rather than the builder, because the warranty can in some cases remain with the home. Tarion’s process is often more practical than court in appropriate cases, but it is also subject to limits on coverage amounts and exclusions.
What to Do When You Find a Problem
Your instinct will be to fix it, especially if water is coming in. You must protect the home, and you have a duty to take reasonable steps to limit your loss. Do that, but do it in a way that preserves evidence.
- Document first. Take clear, dated photographs and video before anything is disturbed. If the drywall is opened, photograph each layer.
- Stop the immediate harm. Emergency mitigation, such as pumping water out or tarping a roof, can usually proceed. Keep the receipts.
- Call your home insurer. Your policy may cover some sudden damage, and it may have its own notice periods.
- Get an independent report. A qualified engineer, building scientist or waterproofing professional can address what the defect is, how long it has likely existed and whether earlier repairs concealed it. These views can become central evidence.
- Give notice to the seller. Before permanent repairs begin, have a lawyer write to the seller and invite them to inspect within a short window. A seller who was given no chance to see the problem will argue they have been prejudiced by its removal. This step is easy to overlook in a rush, and it can have a big effect.
- Collect the deal file. That means the listing, marketing feature sheet, SPIS, your agreement and schedules, your home inspection report, your correspondence, and your lawyer’s closing report.
- Look for history. Check for permits at the City of Brampton, ask neighbours what they recall, and look at old online listings with interior photos taken before renovations.
Be careful about what you post or say. Avoid accusing the seller publicly of fraud before you have the evidence.
The Inspection Issue
Sellers routinely argue that a buyer who skipped the inspection has only themselves to blame. This argument carries some force for visible defects, but it is not necessarily fatal for concealed ones. Similarly, if you did inspect and the report warned about moisture staining and recommended further investigation, the seller will say that you were on notice. Read your report again, ideally with your lawyer, before you decide on a theory of the case. An inspector’s limited, visual review might also be relevant, although inspection contracts often include clauses limiting liability.
Money, Timing and the Right Court
Damages commonly reflect the reasonable cost to repair the defect, or sometimes the loss in the home’s value. Ancillary costs, such as alternative accommodation during repairs, may also be claimed where proven. Improvements that leave you better off than you would have been may lead to a reduction. Unwinding the entire sale, called rescission, is possible but rarely happens after closing, and it generally requires serious circumstances like fraud or a substantial error.
Timing matters. The basic limitation period under the Limitations Act, 2002 is two years from when you discovered, or reasonably should have discovered, the claim, not necessarily from the date of closing. If you ignored warning signs after moving in, a court may date your knowledge earlier than you would. Take note of the day you first noticed something unusual.
Smaller claims of up to $50,000 proceed in Small Claims Court, and larger claims in the Superior Court of Justice. Both sit at 7755 Hurontario Street in Brampton. Consider the cost of expert evidence in light of the amount at stake. Repairs that cost $15,000 may not justify the same process as a $250,000 foundation failure. A properly documented demand letter sometimes leads to settlement, particularly where the seller’s agent or a professional’s insurer is involved.
A Balanced Conclusion
Finding a serious defect in a home you just paid for is upsetting. Many of these situations do not lead to a successful claim, and some do. The difference usually lies in the evidence of what the seller knew, what was actually said, and whether a careful buyer could have seen it. Early documentation and advice will tell you which position you are in.
For more on this kind of dispute, see our page on real estate and mortgage litigation. If you have just discovered a problem and repairs are pending, you can contact our Brampton office so the seller can be notified before evidence is lost.